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The Debt Ceiling, the Budget and the Fallout: The House

With the debt limit ceiling and continuing resolution votes out of the way for now, the media will likely turn to the fallout from the recent drama played out in the halls of Congress. No sooner than the House vote was completed, the liberal bloviators at The Washington Post and the New York Times were predicting the downfall of the Republican Party and the coming Armageddon in the 2014 midterm elections. Quite frankly, I for one am quite tired of the liberal analysis of the warring factions in the GOP rendering the party insignificant or beholden to a handful of Tea Party legislators. It was not that long ago that the Democrats were going through the same internal disputes that the GOP now faces with nary a word. Things have changed over the intervening years- everything now is under a more exacting microscope than in the past with the advent of Internet blogs and websites dedicated to politics. However, what we are witnessing in the GOP is no more its death knell than the past instances of political infighting within the Democratic Party. The biggest difference is that the media is in the pocket of the Democratic Party and they play up the infighting to be more than what it truly is.

Then there is the Democratic leadership and people like Nancy Pelosi and Debbie Wasserman-Schultz who repeatedly point out that while Obama was defeating Romney in 2012, in the House races the Democrats won the aggregate popular vote over the GOP. Although this fact can certainly cannot be denied, it is also meaningless. The more important fact is that the GOP retained control of the House with a sizable majority. Looking back to the last government shutdown in 1996, even though Newt Gingrich and the Republican Party took the brunt of the blame, they still retained the House while losing the aggregate popular vote to the Democrats. In 1942, the Democratic Party saw the same rare phenomena- retaining the House while losing the aggregate popular House vote. Thus, statements by Democratic leaders that winning the aggregate popular vote in House races is somehow indicative of American support for Democratic policies (and Obamacare in particular) is ludicrous.

With respect to the House, some political analysts believe that the 2014 midterms may be predicted by the reaction in 2010 when the GOP had one of the greatest gains in history. Then, the big story (like now, ironically) was Obamacare and its fallout. This piece of “legislation” was perhaps the straw that broke the back of the camel with the American electorate. Besides the auto bailout, the stimulus and the failed cap-and-trade legislation, the fallout from Obamacare’s passage was considered the greatest factor in the 2010 midterm elections. Likewise, the government shutdown and “playing with the debt limit,” some believe, is the equivalent to that scenario.

What these people offer up as proof is the eventual fate of those Democrats who voted for or against Obamacare in the House. First, we need to be clear about a few things here. Obamacare was passed by doing an end-around the normal rules of Congress as they resorted to a misunderstood and misapplied arcane process called budget reconciliation. Then, Obama had basically handed off the legislation to Reid and Pelosi, and Republicans- who did not deny the need for health care reform- were largely cut out while backdoor deals were made with health industry groups and individual Senators to obtain a “YES” vote. In that case, not only the law itself but the process was questioned. Here, perhaps only the process is questioned.

This may explain why Congress’ approval rating is currently somewhere near 10%. The average voter knows the government was “shutdown,” but unless you were a government worker or visitor to a national park, chances are it had very little practical effect on you. Yet, it was the leading story on the nightly news and in the newspapers. Many seem to forget that the original battle was over “defunding” Obamacare in the first place and the process by which that could have occurred. Hence, there are qualitative differences between the 2010 and the 2014 midterm elections.

Another factor that should give the GOP solace heading into 2014 is the fact that after redistricting, most Republican districts are safer today than they were in 2010. Liberals like to decry the alleged gerrymandering that created these districts, but they are no less guilty of the same in states like California, Maryland and New York. In the wake of the passage of Obamacare, Democrats were more exposed to a loss as a result of their vote on Obamacare than most Republicans are today over their votes to defund Obamacare and shutdown the government. This underscores the fact that Obamacare is liked even less than a government shutdown no matter to whom the blame is ultimately attributed.

If anything, what will likely happen in the 2014 House races is the possible election of even more conservative candidates than those that currently occupy the House. In particularly conservative districts, moderation does not necessarily play well. In 2010, 34 Democrats voted against Obamacare and today only six are still in the House. Twenty of these House members lost their general reelection campaign that year, two retired, two lost bids for higher office, one lost a primary election and the remainder of those not in the House today lost or retired in 2012. Obviously, their votes on Obamacare was the primary reasons for retirement or electoral losses in 2010, and it played a larger role than any government shutdown will have with respect to Republicans in 2014.

In 2014, there are 25 districts won by Obama in 2012 that are currently occupied by Republican House members. Only one has a serious chance of flipping into the Democratic fold- California’s 31st. Two others- New York’s 19th and Colorado’s 6th- are considered in the toss-up category, but even before the budget/debt ceiling drama played out, they were considered toss-ups. In other words, the recent debate did not tip the scales. California is further complicated going forward given their open primary system where the top two vote getters advance to the general election regardless of party affiliation. Of these 25 districts, one Congressman- Bill Young in Florida’s 13th- is retiring. And while it is early in the electoral cycle, only 5 have drawn a Republican primary opponent- Frank LoBiondo (NJ-2), Scott Rigell (VA-2), John Kline (MN-2), Fred Upton (MI-6) and Rodney Davis (IL-13). In fact, nine do not even have a viable future Democratic opponent at this point.

Another consideration is the temporal effect of this drama. In 2010, Obamacare was passed in March and the election was in November- less than eight months. The debate over Obamacare and the midnight shenanigans were fresh in the minds of the electorate. In the current case, we still have to get through the 2013 election, a 2014 primary season and the general election campaign. There will be other items in the interim of controversy that will deflect the electorate’s attention from this shutdown which will more directly affect the outcomes in 2014. Immigration reform and how addressing budget deficits and the debt come immediately to mind, along with possible tax reform. These are all areas where conservative Republicans have an advantage in most districts that are in play.

Finally, there is the fact that in midterm elections, the party in power in the White House historically loses seats in the House. From this standpoint, Republicans should take solace. However, there have been instances where this historical trend failed to materialize, but never to the extent that the opposition party in control of the House actually lost the House. For Democrats to do so is a Herculean task from the start given the large current GOP advantage. From my analysis, the Republicans will likely lose, at most, 2-3 net seats in the House- not nearly enough to even gain leverage with their agenda.

Where this whole fiasco WILL affect the House is in three ways. First, with possibly more conservative members from the more conservative districts, depending on how the incumbent voted, what the liberal media describes as “polarization” will be potentially more pronounced. Instead of the media talking about “40 conservative Tea Party members” holding the Nation hostage, there may be more in 2015 in that category. This means that John Boehner’s role as Speaker may be in jeopardy come 2015. In the immediate aftermath of this debacle, conservatives in Congress are publicly rallying in support of him. Congressmen like Jim Jordan of Ohio and Raul Labrador of Idaho- who have been critical in the past- have made such public statements. In fact, Labrador suggested that maybe some “other” members should go rather than Boehner. Still, this whole scenario needs to be played out and how Boehner addresses future confrontations with the White House will be watched closely by the GOP caucus for signs of weakness or capitulation.

Second, obviously Democrats will play this fiddle until their fingers bleed. They will characterize vulnerable incumbent Republicans who voted to defund Obamacare as extreme and out of the mainstream. These messages will obviously not fly in the conservative districts, but may in the more moderate districts in bluish states. Thus, how the Republican candidate handles these accusations will be important. Explaining their vote will be at the forefront and the sooner they get started on that task, the better. With the next congressional recess, they should be out there explaining their votes through town hall meetings and mailings. Being preemptive in this area cannot hurt.

Third- and probably most importantly- is what the near future Republican strategy will be. The recent resolution of the problem- funding the government through mid-January and raising the debt limit until mid-February- necessitates that these issues will rear up again in a midterm election year. Does the GOP risk another government shutdown to exact concessions from Obama? Do they again risk the debt ceiling fight to exact concessions? Quite frankly, given all the polling and assuming those polls to be accurate, most Americans are simply tired of these battles. This is becoming almost a yearly thing with the debt ceiling in 2011, the fiscal cliff in 2012, and now this in 2013 with the possibility of revisiting it in 2014. Most people see only the end results and not necessarily the reasons for the GOP resorting to these tactics- a hyper-partisan White House and his Democratic lackeys (Reid, Pelosi) in Congress. Here, the “fight” for the Democrats was esoteric- “if the President gives in, it sends a bad message to future presidents and congresses-” as opposed to the Republicans which was more visceral- defunding an unpopular government program and tackling the Nation’s enormous debt and spending problems. In the mind of the average voter- assuming the message is communicated correctly- the visceral trumps the esoteric every time.

Therefore, forcing the hand of Obama and that of the Democrats, it is incumbent upon the GOP to hold their feet to the fire on the inevitable future budget negotiations. Getting the Senate to actually pass a budget, then reconciling it with the House budget through the normal conference system would be a small, but important victory for the GOP. If not, then Reid and the Democrats can be portrayed as being the obstructionists. As part of this whole process, tax reform must be taken up along with a viable,popular GOP plan- not one that guarantees tax cuts and such, but one that limits governmental spending while plugging tax loopholes and possibly raising revenue through the elimination of certain subsidies, deductions and exemptions. Capping charitable contributions or mortgage interest deductions is a starting point. Of course, the non-profit and housing/banking lobbyists will come out in full force, but these are some minimal reforms that may gain popular traction among conservatives and independents alike and show good faith on the part of Republicans on the revenue-generation side of the equation. However, the projected increased revenues must be tied to debt reduction.

Before October 1st, a CBS/New York Times poll indicated that the economy/jobs was the top concern of voters. When one throws in health care and the federal budget/debt, these three categories account for 48% of the concerns of Americans. Eliminating the effects of partisan politics came in at a distant 4%. Thus, these generic congressional polls hold little meaning. To most voters, it is a “kick all the bums out, but not my district’s bum” attitude. By concentrating on the issues that most concern Americans- the economy, jobs, health care, and reducing the debt- Republicans in the House have nothing to fear come Election Day 2014. Right now, the policy wonks and number geeks should be working overtime to articulate in understandable terms the problems and the solutions.